All eyes on the markets for tomorrow: What will the Central Bank's interest rate decision be?

The Central Bank of the Republic of Turkey (TCMB) Monetary Policy Committee (PPK) meeting will be held on Tuesday, August 20, under the chairmanship of TCMB Governor Fatih Karahan.

Following the critical meeting, the policy rate, which the markets are eagerly awaiting, will be announced at 14:00.

WHAT WILL THE TCMB'S INTEREST RATE DECISION BE?

Economists are certain that the policy rate will be kept steady at 50 percent. The median forecast for the year-end policy rate is estimated at 45 percent.

WHEN IS THE FIRST INTEREST RATE CUT?

According to a report by NTV, expectations for an initial interest rate cut in September have been shelved following the Central Bank's guidance.

Economists who expect an interest rate cut in the final quarter do not share a common view regarding the timing and magnitude of such a cut.

Four of the economists participating in the Reuters survey expect the first interest rate cut to occur in October, four others in November, and two economists expect it to happen in December.

Five institutions stated that they expect the TCMB to make its first interest rate cut in the first quarter of 2025.

In the AA Finance expectation survey, among the economists who shared their year-end forecasts, 2 predicted the policy rate would be 50 percent at the end of the year, 1 predicted 49 percent, 3 predicted 47.5 percent, 5 predicted 45 percent, and 1 predicted 40 percent.

At the PPK meeting held last month, the policy rate was left unchanged at 50 percent.

NO CHANGE EXPECTED IN INTEREST RATES

While economists do not expect a change in the policy rate, any potential changes in the PPK statement will be closely monitored.

According to bankers, it will be observed whether guidance regarding liquidity, domestic demand, and the reduced probability of interest rate hikes will be removed from the statement.

WILL THERE BE A NEW STEP FROM THE TCMB?

One of the agenda items for the committee will be the excess Turkish Lira in the market, as has been the case in recent months.

It is stated that the TCMB may take new steps to withdraw excess liquidity from the market.

The TCMB, which can withdraw unlimited liquidity from the lower band of the interest rate corridor in the overnight market, also began trading in the Takasbank Money Market last week.

YEAR-END INFLATION EXPECTATION ROSE

The TCMB published its August Market Participants Survey, conducted with 69 participants consisting of representatives from the real and financial sectors as well as professionals.

According to the survey, the year-end inflation expectation rose from 42.95 percent to 43.31 percent. The expectation for inflation 12 months ahead decreased from 30.02 percent to 28.71 percent, and for 24 months ahead, it fell from 19.32 percent to 19.30 percent.

The year-end Dollar/TL expectation fell from 37.36 to 37.27.

News Source: 12punto